Summary of WuXi Biologics Conference Call Company Overview - **Company**: WuXi Biologics (2269.HK) - **Market Cap**: HK$122.4 billion / $15.6 billion - **Enterprise Value**: HK$119.8 billion / $15.3 billion - **Current Price**: HK$28.75 - **12-Month Price Target**: HK$25.60 - **Downside Potential**: 11.0% [1][5][18] Key Financial Highlights - **1H25 Preliminary Revenue Growth**: +16% year-over-year (y/y) [1] - **Net Profit Growth**: +56% y/y, slightly above market expectations [1] - **Gross Margin Expansion**: Increased by 3.6 percentage points y/y, attributed to milestone bookings in the "R" segment [1] - **Utilization Improvement**: Enhanced utilization of newly released capacity, particularly from WuXi XDC, and reduced losses from the Ireland site [1] - **Administrative Expenses**: Lowered due to a decline in share-based compensation, contributing to an 11% y/y increase in adjusted non-IFRS net profit [1] Future Outlook and Investor Concerns - **New Order Growth**: Expected growth of +13-15% y/y for continuing operations in FY24, with investor concerns regarding a slight decline in new orders excluding WuXi XDC [2] - **Visibility on Late-Stage Projects**: As of year-end 2024, the company reported 66 Phase III and 21 commercial projects, enhancing revenue predictability [3] - **Milestone Payments**: Near-term milestone payments are projected to reach US$140 million, with half expected to be booked in 2H24 and the remainder in 1H25 [3] Capital Expenditure and Expansion Plans - **Capex Guidance for FY25**: Management has guided for Rmb6.0 billion in capital expenditures, focusing on expansions in the US and Singapore [17] - **Specific Allocations**: Rmb1.4 billion earmarked for WuXi XDC's capacity expansion, with total budget estimates of US$500 million for the US site and US$2 billion for the Singapore site [17] Risks and Methodology - **Price Target Risks**: - Upside risk if legislation affects only federally funded projects or excludes WuXi names - Downside risks include potential legislative scenarios that could exclude US or ex-China revenue, cooling biotech funding, and increased competition [18] Financial Projections - **Revenue Forecasts**: - FY24: Rmb18,675.4 million - FY25: Rmb21,276.5 million - FY26: Rmb24,012.1 million - FY27: Rmb27,094.6 million [5][12] - **EBITDA and EPS Growth**: Projected EBITDA growth of 13.8% in FY24 and EPS growth of 15.3% in FY25 [12] Conclusion WuXi Biologics is positioned for growth with strong revenue and profit increases, but faces challenges related to new order momentum and external market conditions. The company's strategic focus on capacity expansion and milestone payments will be critical in maintaining its growth trajectory. Investors should remain cautious of legislative risks and competitive pressures in the biotech sector.